Author Topic: buying a duplex - best mortgage company suggestions?  (Read 3707 times)

mathew1659

  • 5 O'Clock Shadow
  • *
  • Posts: 11
buying a duplex - best mortgage company suggestions?
« on: March 03, 2015, 09:14:41 AM »
Im buying an occupied duplex as an investment property.

68k purchase price
17k down payment. (25% down) + whatever misc. fees I will pay cash for.
----
51k mortgage, im looking for 30yr fixed.

I understand most mortgage companies wont do a mortgage under 50k which is why im putting 17k down, im wanting a 30yr fixed rate mortgage product. Not interested in shorter term loans as my purpose is to maintain a high cash on cash return, not principle pay down, therefore utilizing other peoples money (bank's). I wont be living in either unit, and as mentioned they are both currently occupied.

Any recommendations? seems like the online options out there are endless and I dont want to keep having multiple companies pull my credit thereby causing a slightly negative effect.

thanks in advance, much appreciated!

jda1984

  • Stubble
  • **
  • Posts: 179
Re: buying a duplex - best mortgage company suggestions?
« Reply #1 on: March 03, 2015, 09:28:05 AM »
When we bought our duplex, we lived in one of the units and got a conventional loan, so I don't have first hand experience for you.

A friend of mine bought a duplex which was not owner occupied and he told me he had to put 30% down to finance it.  I also know that most rental loans at least where I live are considered commercial loans and have a higher rate.  It might be worth paying cash completely or financing it by mortgaging your place.  There are obviously some tax implications of each strategy.  I'd think a refinance of your place (assuming you own your current residence) or HELOC would get you the best of both worlds.  You can take the mortgage interest deduction (assuming you itemize) and you can depreciate the value of the building on the duplex.  A HELOC could even be interest only if you like cash flow, though the rate is probably adjustable.

Good luck!

mathew1659

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: buying a duplex - best mortgage company suggestions?
« Reply #2 on: March 03, 2015, 12:09:31 PM »
Thanks for the input jda.

Yikes to the 30%. Hopefully they dont make me do that, that would eliminate the possibility of a mortgage because I would be under 50k then. I do own my personal home outright and yes also have an interest only HELOC which I could use to pay cash for the property. Im going "commercial" on a different property but was really hoping for one of those sexy sub 5% long term products on the duplex since even after the down payment the loan size will be just above the 50k requirement. The small bank I do commercial loans with has a mortgage department that im starting to check with but they dont specialize in them,  im waiting to see what they offer me.

But I figured I would check around and see if anyone has any "must check with" type of physical or online mortgage companies to recommend.

affordablehousing

  • Bristles
  • ***
  • Posts: 409
Re: buying a duplex - best mortgage company suggestions?
« Reply #3 on: March 03, 2015, 12:46:14 PM »
I'd find a way to say it's your primary residence and get a conventional rate. With money center bank lenders the difference in spread is around 50 basis points for owner occupied versus investment. Ditto on the higher equity requirement of 30% if it's a straight investment property.

MikeBear

  • Bristles
  • ***
  • Posts: 390
  • Age: 61
  • Location: Michigan
Re: buying a duplex - best mortgage company suggestions?
« Reply #4 on: March 03, 2015, 01:55:36 PM »
It's not impossible to get a mortgage under $50k, as long as the property passes all other criteria. There's plenty of places that will do it. You most likely though will pay a slightly higher interest rate.

Check with "local to the property" banks first. They have a vested interest in keeping their area nicer, and houses occupied.

Do NOT under any circumstances tell them you are going to move in and have this as owner occupied, IF you really have no intention of doing that. It's not ethical, and can get you in trouble. Cheating your way to RE is just not cool.
« Last Edit: March 03, 2015, 01:58:48 PM by MikeBear »

Poorman

  • Bristles
  • ***
  • Posts: 260
  • Age: 42
  • Location: Orange County, CA
Re: buying a duplex - best mortgage company suggestions?
« Reply #5 on: March 03, 2015, 02:29:46 PM »
I'd find a way to say it's your primary residence and get a conventional rate. With money center bank lenders the difference in spread is around 50 basis points for owner occupied versus investment. Ditto on the higher equity requirement of 30% if it's a straight investment property.

Ignore the advice to commit fraud.

affordablehousing

  • Bristles
  • ***
  • Posts: 409
Re: buying a duplex - best mortgage company suggestions?
« Reply #6 on: March 03, 2015, 02:34:13 PM »
just to be clear i'm in NO WAY saying you should claim it's owner occupied and not live there, you should tough it out and live there for however long you need to to get the better rate. are you going to suffer a high rate because you can't tough it out in a rental unit for a while? airbnb your old place. love how people want to point fingers and assume the worst.

Poorman

  • Bristles
  • ***
  • Posts: 260
  • Age: 42
  • Location: Orange County, CA
Re: buying a duplex - best mortgage company suggestions?
« Reply #7 on: March 03, 2015, 02:40:16 PM »
I purchased a rental property in November that coincidentally cost 68k.  The lender I used was AimLoan.com and they have the best rates of any lender that I've seen, and I'm in the industry so this is something I monitor constantly.  (I'm eligible for a discounted rate through my employer but they won't go below a 50k loan balance, so I went with a competitor.)  I believe Aim Loan does loans down to 30k.

One word of caution though.. They charge a $500 lock fee up front so if you aren't certain your transaction will close you may want to go with a different lender that charges you the appraisal/lock fee later in the process.  Also, I'm in California and I'm not sure if they lend in all 50 states.

Poorman

  • Bristles
  • ***
  • Posts: 260
  • Age: 42
  • Location: Orange County, CA
Re: buying a duplex - best mortgage company suggestions?
« Reply #8 on: March 03, 2015, 02:49:45 PM »
just to be clear i'm in NO WAY saying you should claim it's owner occupied and not live there, you should tough it out and live there for however long you need to to get the better rate. are you going to suffer a high rate because you can't tough it out in a rental unit for a while? airbnb your old place. love how people want to point fingers and assume the worst.

I'm not assuming the worst or pointing fingers.  The OP clearly says it's an investment property and your advice was to "find a way to say it's your primary residence".  That sounds like advice to commit fraud so somebody was bound to say something.  It just happened to be me.

mathew1659

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: buying a duplex - best mortgage company suggestions?
« Reply #9 on: March 05, 2015, 03:36:28 AM »
I purchased a rental property in November that coincidentally cost 68k.  The lender I used was AimLoan.com and they have the best rates of any lender that I've seen, and I'm in the industry so this is something I monitor constantly.  (I'm eligible for a discounted rate through my employer but they won't go below a 50k loan balance, so I went with a competitor.)  I believe Aim Loan does loans down to 30k.

One word of caution though.. They charge a $500 lock fee up front so if you aren't certain your transaction will close you may want to go with a different lender that charges you the appraisal/lock fee later in the process.  Also, I'm in California and I'm not sure if they lend in all 50 states.

Very much appreciate that recommendation! Thats awesome they do investment loans and on that small of an amount and from the site it looks like they dont hike the rate because of the low dollar amount. I will keep them in mind, from what it looks like they lend in Nebraska.